Brazilian Overview Monthly Report - MARCH 2026

MAIN FACTS

The world is experiencing a moment of intense tension due to the war in Iran, which began in the last days of February. With the escalation of the conflict and the “closure” of the Strait of Hormuz, the price of oil has skyrocketed on the international market, rising from the US$60 range to reach US$120. Even with some recent stabilization, the price remains at a high level, above US$100.

This scenario generates great apprehension for global economies, putting pressure on prices both due to the direct impact on fuels and the increased logistical costs, which end up being passed on to products on supermarket shelves. The problem is that, as of mid-March, there is still considerable uncertainty regarding the unfolding of the conflict, its duration, intensity, and effects on oil production, air transport, and other economic activities. In Brazil, the effects are beginning to be felt gradually. Petrobras has already announced adjustments to fuel prices at refineries. However, given that it is an election year and the potential inflationary impact — with direct repercussions on the government’s approval rating — the measure of eliminating the federal tax on diesel oil imports was adopted, reducing the intensity of the pass-through to the consumer.

In some regions, such as Bahia — where there is a private refinery — the adjustments had already occurred in early March, and local consumers began to pay more for gasoline and diesel. Another factor that helped mitigate the effects in the country was the behavior of the exchange rate. Unlike previous crises, when the real depreciated more sharply, this time there was relative stability, also influenced by a weakening trend in the dollar. Before the conflict, the exchange rate was around R$ 5.15 per dollar, reached approximately R$ 5.30 and

currently fluctuates near R$ 5.25.

Even without a clear definition of new internal fuel price adjustments, inflation continues, so far, without significant structural pressures. In February, the index registered a 0.70% increase, driven mainly by seasonal factors, such as adjustments to school tuition and urban transport fares. In the food and beverage group, for example, the variation was only 0.26%.

In the accumulated 12 months, inflation is at 3.81%.

Until February, the scenario indicated that the Central Bank, through the Monetary Policy Committee (Copom), would begin a new cycle of reducing the Selic rate. This movement was supported by inflation close to 3% and the expectation of stability at this level in the coming years.

However, given the new global context of uncertainties, Copom opted, at the March meeting, to reduce the Selic rate by only 0.25 percentage points, bringing the rate to 14.75% per year — a more moderate pace than expected. In addition, the Central Bank did not clearly signal the next steps of monetary policy.

This scenario is unfavorable for the Brazilian economy, since high interest rates limit more robust growth in activity. According to IBGE, the expanded retail trade — which includes vehicles and supermarket wholesale — registered a 1.1% increase in January, after a practically stable performance throughout 2025.

In industry, a sector also heavily dependent on credit, there was modest growth of 0.2% in the same period. The service sector, on the other hand, shows more consistent performance, with an expansion of 3.3% in January, driven mainly by the information technology and tourism segments.

In Tourism, a monthly survey by FecomercioSP points to revenue of R$ 26 billion in January, with growth of 2.3% compared to the same month of the previous

year — a new record for the period. Even so, the rise in the price of oil and internal fuel adjustments directly impact the sector’s chain, especially in the air, road and vehicle rental segments. With higher costs, the consumer’s willingness to spend on these services tends to decrease.

The labor market remains heated, with the lowest unemployment rate in the historical series, at 5.1%. However, a growing portion of household income is committed to debt repayment. According to the National Confederation of Commerce (CNC), indebtedness has reached a record level, with 80.2% of families having some type of financial obligation.

This context results in a loss of dynamism in consumption, reduced productivity, and lower profit generation for companies. Added to this is the erosion of purchasing power caused by the increase in fuel prices.

Thus, in addition to the impacts of the war in Iran, Brazil faces significant structural and cyclical challenges: high interest rates, increased public debt, fiscal deficit, changes in taxation—such as the taxation of dividends— and the implementation of tax reform. These factors keep the country trapped in a pattern of low growth. A new shock government-controlled inflation program would only worsen this already complex situation.

3 IMPORTANT DATA:

1

IMPORTANT FACTS:

Inflation: According to the Broad Consumer Price Index (IPCA) from IBGE, Brazil’s official inflation rate rose 0.70% in February, driven by seasonal adjustments, such as those in school courses, which led to a 5.21% increase in the education group. Public transportation also contributed, with a 0.74% increase in the transportation group for the month. The crisis in Iran and the rise in oil prices have not yet been captured by the index.

2

GDP: The Gross Domestic Product (GDP), calculated by IBGE, ended 2025 with growth of 2.3%, as expected. The IBC-Br, a Central Bank indicator that serves as a preview of GDP, points to a 1% increase in January of this year compared to the previous year, signaling continued growth throughout the year.

Credit: The average interest rate charged to consumers reached 61% per year in January, above the 54% recorded in the same period last year. With the increase in the number of indebted individuals, financial risk intensifies, since interest costs are higher and any delays in debt payments have an increasingly significant impact on the family budget.

CONFIDENCE INDEXES:

• Consumer Confidence (ICC): The index remained stable in February compared to January, staying at 127.4 points, but is 5.7% above the level recorded in the same period last year. The situation in the month was favorable, with low inflation and strong employment. However, with the arrival of the conflict in Iran and the possible impacts on consumer inflation, confidence may be affected in the next results.

• Business Confidence Index (ICEC): In February, business confidence in the retail sector was slightly below that observed in January, falling from 104 points to 103.3 points, representing a decrease of 0.6%. Year-on-year, there was stability. As with consumers, the international crisis, coupled with rising prices in the country and high interest rates, should negatively impact confidence in the following months.

Note: The ICC and ICEC range from 0 to 200. From 100 to 200 points is considered an optimistic level, and below 100 points pessimistic. Although the indicators are from the city of São Paulo, they follow the trend of what is happening in the rest of the country since the city, the largest in Brazil, represents 11% of the national GDP.

TRAVEL AND TOURISM

After a promising start to the year, with good sales in January and February and the announcement of new flights by Gol (direct flights from Rio de Janeiro to Paris, Lisbon, New York, and Orlando) and Latam (Brussels, Amsterdam, and Cape Town), in addition to the announcement of reinforcements by American Airlines in Rio (during the peak summer season in Brazil, to Miami and New York), the leisure market experienced lower sales in March and concerns about the war in Iran.

Important hubs for travel to Asia, Africa, and the Middle East, Doha and Dubai (the latter also an important final destination) disappeared from travelers’ maps because of the conflict between the United States/Israel and Iran. As a result, many trips were canceled or postponed, and some were rescheduled via Europe and the United States. In the latter case, the visa requirement for a connection to Asia is a significant impediment.

The war scenario makes travel more expensive due to soaring fuel prices and the absence of important players (such as Emirates and Qatar Airways), changes the travel patterns of Brazilians, who may prefer safer destinations at the moment (Brazil, United States, Europe, and South America), and leaves much uncertainty and insecurity in the market.

The United States naturally attracts Brazilians, especially Florida, which has a genuine and consistent connection with our market, and to take advantage of market changes, they need to focus on:

Connectivity (which has improved on the Brazilian side, but stagnated on the American side). At the beginning of the year, Brazil had 191 weekly flights to the United States, with 2.6 million seats. There was a 5% drop in flights, mainly due to cancellations by Azul Linhas Aéreas, which was in financial recovery (it exited in February). With the new flights announced by Gol and American, the supply should increase this year. São Paulo GRUAirport is the airport with the most direct flights to the United States, but there are also connecting options, flying Avianca, Copa, or Latam.

Added value (Brazilians with money want to travel, but they need to see value and benefits in the investment)

Security (terrorism threats scare Brazilian travelers, as does the persistence of war) Diversity of destinations and activities (to compensate for trips that would be made to other parts of the world. It’s time to show the United States beyond Florida, for things that are not usual in the country)

Invest in niches where they are not yet Top of Mind for Brazilians (such as luxury, wellness, or nature immersions) and reinforce their strengths (sports, World Cup, entertainment, technology, technical trips, cruises).

Europe, on the other hand, benefits from a large and diverse air network and from being Top of Mind in luxury, culture, and gastronomy,

for example. The proximity to current conflicts (especially Eastern Europe), the high cost of travel (especially Italy and France), the fuel limitations already announced by some airlines, and overtourism (largely due to the American market) are working against us at this time.

Travel to Brazil should stand out during this time of uncertainty, as well as to Chile and the Caribbean without a visa. Mexico is returning to the Brazilian market due to the electronic visa, and Argentina, our second largest international destination, is too expensive for the average Brazilian traveler.

CALENDAR OF EVENTS AND FAM TOURS

Being at the main events for travel agents is a good opportunity to strengthen ties and

present new products to Brazilians. ILTM Latin America takes place in early May, Abav Expo in late September, both in São Paulo, and Festuris Gramado in November. In addition to these major events, there are smaller events across the country that can reach important specific markets, such as the Northeast or South of Brazil. The next major fair is WTM Latin America, on April 14th.

Taking travel agents and tour operators to visit destinations in person is another important action, as many destinations have not yet resumed promotional activities in Brazil since the pandemic. And the news, even though it is disseminated on social media and websites, is so numerous that it is difficult for professionals to stay updated.

This report is produced by PANROTAS and FECOMERCIOSP to support your business decisions. The contents are valuable assets to Destinations and Travel Organizations, both domestic as well as international. For further information please contact ri@ fecomercio.com.br redacao@panrotas.com.br